Talisman feasts on Swedes - Canadian group's purchase excludes Sudan and Libya
Upstream, June 21, 11:18 GMT
By Dan Rigden
Talisman Energy, with eyes firmly on Malaysia and the North Sea, has struck a deal to buy Lundin Oil of Sweden for $344 million -- as exclusively reported two weeks ago by UpstreamOnline.
Talisman said a wholly-owned Swedish subsidiary will make an offer to acquire all the outstanding shares and warrants of Lundin Oil of SKr36.5 (approximately US$3.43) for each Class A and Class B share of Lundin Oil. The Lundin family has accepted the terms and is recommending them to shareholders.
If the offer is successful, all of Lundin's current interests in Sudan and Russia will be conveyed to a newly formed spin-off company Lundin Petroleum AB, the shares of which will be distributed to holders of Lundin Oil shares on a one-for-one basis. It will be managed by the current Lundin Oil team.
Talisman will retain Lundin's interests in the North Sea, Malaysia, Vietnam and Papua New Guinea at a cost of approximately $344 million (C$529 million) including debt and working capital. The Canadian company, which has been under fire at home for its operations in Sudan, is not buying Lundin's holdings in the war-torn African country.
In a separate transaction, Lundin sold its 25% operating interest in the En Naga block in Libya's Sirte basin to Petro-Canada for $75 million. The block contains two proven but undeveloped oilfields. Libya's National Oil Company holds 75% of the project.
"This acquisition represents a logical and promising continuation of Petro-Canada's interest in North Africa," said the Canadian company's executive vice president Norm McIntyre.
Talisman president and chief executive Jim Buckee said of his company's purchase: "This transaction provides another long-term growth vehicle for Talisman shareholders in a new core area and also a desirable set of North Sea assets: 70% of Lundin's North Sea production is from assets where Talisman already has a significant interest.
"Including future capital costs, the full cycle cost of this acquisition of about $3.47/boe and onstream production cost of $11,050/boepd are both very attractive."
The cash offer price represents a premium of approximately 52% over the price of Lundin shares on 15 May, immediately prior to formal negotiations on Talisman's offer and Lundin shareholders will also receive shares in Newco, said Talisman.
The Canadian company said the acquisition has two main drivers -- Malaysian growth and North Sea fit. Talisman expects Malaysia will be a core area by 2004 with net production in excess of 50,000 boepd. In addition, there is room to expand from this base with known development opportunities.
"The oil industry has focused on larger opportunities and there are numerous undeveloped fields in excess of 25 million barrels each. Malaysia has recognised the need to provide improved terms for small field development," said Talisman.
In the North Sea Lundin's assets have a 70% overlap with Talisman's in the Brae and Claymore areas.
In total, the transaction will add over 50 million boe of proved reserves and about 140 million boe of probable reserves, according to Talisman.
Lundin Oil president Ian Lundin said: "We believe the offer represents a very attractive opportunity for Lundin Oil's shareholders. The offer provides a significant premium over the historical trading levels for Lundin Oil shares and through the spin-off shareholders will have continued equity participation in a new exploration company with excellent potential for growth through existing oil discoveries and with exposure to some of the largest oil basins in the world." |
